Retail Evolves in Highly Competitive Environment

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Oct. 20, 2016

grocery wars

Houston retail continues to be one of the hottest markets in the nation. No category demonstrates this more clearly than the city’s grocery sector.

Grocers, and other retailers alike, continue to play catch-up with Houston’s strong population growth over the last few years. Pent-up demand remains the most significant force propelling the city’s retail sector forward.

Houston finds itself at the center of the so-called grocery wars, which has major, regional and niche grocery brands competing for market share and loyalty from the metros growing consumer base. In response to the competitive environment, companies are designing new store concepts and implementing creative strategies in an attempt to gain market share.

For example, InstaCart and its delivery services successfully entered the Houston metro in 2014, driving brands like H-E-B and Kroger to test pick-up and delivery options for customers. In a similar vein, Florida-based drive-thru grocery store Farm Stores, recently made its first out-of-state step into the Houston market.

Houston’s high population growth and diverse consumer base, have also positioned the city as a highly profitable location for entertainment concepts to put a stake in the ground. Companies like Pinstripes and Momentum Indoor Climbing have made headlines with their Houston plans. Demand from new-to-market retailers such as these has helped drive the metro’s leasing activity above 1.5 million square feet for the fourth consecutive quarter.

Sustained high demand has spurred sustained high development. Houston’s retail construction pipeline currently sits at 4.2 million square feet, one of the largest in the U.S. The north and northwest retail submarkets are leading the way with more than their fair share of construction – and it’s being absorbed. Combined, these two submarkets account for nearly 2 million square feet of current construction and have absorbed approximately that same amount year-to-date.

For the full breakdown on Houston’s retail market, download the Q3 2016 Houston Retail Insight & Statistics.

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